Third-party investors in the property catastrophe reinsurance industry have become increasingly sceptical following the 2018 cat season, as they have seen capital trapped for a second consecutive year, according to AM Best. It refers to the Eurekahedge ILS Index, which reported negative returns for four months straight from September to December, adding: "Investors... have started demanding higher returns and reallocating their portfolios to support renewing investments more selectively".
China's ambitious Belt and Road Initiative (BRI) could provide opportunities for the ILS sector, according to Phoenix C Retro CEO Kirill Savrassov. "As there are massive infrastructure investments in both China and many more nations including its neighbouring countries, the (re)insurance industry, including the ILS community will have its own opportunities and challenges with regards to the BRI projects,” he said.
Global Banking & Finance
Argo Group has revealed it was able to retain the overall structure of its reinsurance and retrocession for 2019, including its access to third-party capital from investors for which it is increasingly originating underwriting business. This strategy means that Argo is underwriting higher gross premiums in its property and catastrophe exposed business lines, but ceding more to third-party capital partners resulting in less of an increase in net premiums earned.
RGA Canada has announced the completion of a transaction with life insurer Manulife to reinsure longevity risk from an in-force block of Canadian group payout annuities. In aggregate, RGA Canada will reinsure the longevity risk in respect of approximately 45,000 annuitants.
Top three Australian carrier Suncorp has announced it will increase its natural hazard allowance from A$720m to A$820m and purchase an additional A$200m natural perils reinsurance cover to sit on-top of the allowance, providing a further level of cover that will work in conjunction with Suncorp’s main catastrophe program and natural hazard aggregate protection program. "The additional cover will further reduce the volatility in Suncorp’s earnings caused by natural hazards", it said in a statement.
Multiple winter storms and extreme cold led to 45 fatalities and a billion-dollar economic cost in the United States in January, according to Aon Benfield's Impact Forecasting. Meanwhile, Australia recorded its hottest month on record - 30°C (86°F) - in January since data began being kept in 1910. Less than normal precipitation only enhanced the ongoing severe drought. At the same time, Northern Queensland was hit by severe flooding. Claims from the floods in and around Townsville have so far reached A$165m, according to the Insurance Council of Australia.
The loss tally for catastrophe bonds impacted by the 2017 disaster events has now climbed to $1.1 billion, according to Trading Risk. The figure is a $191m deterioration on the $899m of losses that had been expected based on claims reports last year, and just under $100m steeper than implied secondary market discounts at year-end. The increase was driven by higher anticipated claims from multi-peril aggregate bonds.
Posted: Monday, February 11th, 2019